What is geofencing marketing and how to use it?

In order to optimize advertising costs and maximize revenue, marketing leaders are using spatial data to create geofences in specific areas, allowing them to reach audiences that are more likely to become potential customers.

What is geofencing marketing?

Geofencing marketing is based on location intelligence, which allows enterprises to connect with smartphone users in a designated geographic area through mobile applications. This tool consists of establishing virtual boundaries around a point or area of interest, which generates a trigger every time someone with a mobile device intersects with them. When this happens, a notification announcing a store, brand, service, or product is sent to that person’s mobile device.

How does it work?

There are three main ways to use this tool:

The first is to create a radius from a centroid, by locating the center point of a point of interest a proximity zone is created that will send announcements every time someone with a mobile device gets close enough to the given radius.

The second is with a travel time, also known as isochrone, with this tool we calculate the time it takes to get to a specific point from any other place using location intelligence techniques, managing to send ads only to people who can move to a particular commercial location in a given time.

The third is with something known as building footprint. This method uses measured polygons to represent the exact physical boundaries of a building, and thus send notifications only to people who actually set foot in the building or on a property.

Geofencing marketing benefits

  1. Instant advertising

One of the reasons why geofencing ads are superior to traditional ads is that they are delivered almost instantly in response to a potential customer’s actions since as soon as they cross the geofence, enterprises can start marketing to them immediately.

  1. Identifying audiences using geo-targeting techniques

Another advantage of geofence advertising is that it covers specific geographic areas. This allows marketers to deploy them in locations where they expect potential customers to be, making it much more effective to reach interested consumers.

  1. Cost optimization

The fact that geofence marketing campaigns can be deployed in precise locations allows paying only for ads in the specific areas where they are deployed. And if deployed correctly, they can reach a much higher concentration of people who are more likely to become customers.

  1. Flexibility

This tool is adaptable to any marketing strategy as it can be configured to cover proximity around any business, people already inside the point of sale, areas within a certain transit time of the business, or in locations that have high foot traffic concentrations, this allows to let people know that your business is an accessible option.

  1. Increase customer loyalty

It costs ten times as much to win a new customer as it does to retain an existing customer. So geofencing marketing can help businesses to achieve this, without having to offer promotions or discounts.

  1. Optimize data and analytics

A key part of geofencing marketing is analytics is that it relies on data, which provides your marketing team or vendor with actionable insights for your next campaign. Geofencing provides leaders with data in real-time, measuring factors such as ad impressions or views, conversion zone visits, among others.

Some real-world use cases of geofencing marketing:

Burger King, a food tech giant, uses geofencing and location technology to steal customers from rival McDonald’s. Using location-based marketing, Burger King launched the “Whopper Detour” campaign, which increased downloads of its mobile app by 1.5 billion.

McDonald’s in 2016 began testing geofencing on its mobile app to attract more customers. To reduce queues, traffic jams and serve fresh and hot food, McDonald’s began integrating geofencing technology into its mobile app. Following the success, McDonald’s decided to go with geofencing to increase foot traffic and improve the customer experience.

Starbucks is also experimenting with location marketing to gain customer experience. To entice customers with special offers and discounts, Starbucks uses customers’ real-time location to notify them of special hours. These marketing tactics help Starbucks leave a lasting impression on its customers.

At PREDIK Data-Driven we specialize in profiling your consumers to create geofencing marketing strategies, if you want to optimize your advertising campaign costs, don’t hesitate to contact us.

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